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Application of New DOL Overtime Rule to Puerto Rico

On May 18, 2016, the U.S. Department of Labor, Wage and Hour Division, announced the final changes to the regulations that govern the “white collar” overtime exemptions to the Fair Labor Standards Act (“FLSA”). It remains to be seen, however, if and when these regulations will apply to employees in Puerto Rico. While these changes are scheduled to go into effect on December 1, 2016, pursuant to the latest version of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), H.R. 5278, 114th Cong. §404 (2016), it is possible that Puerto Rico will be exempted from this effective date.

The latest version of PROMESA, which was published late on May 18, 2016, provides for the establishment of an Oversight Board to address Puerto Rico’s current debt crisis, and expressly dictates that the new FLSA regulations “shall have no force or effect in the Commonwealth of Puerto Rico” until the Comptroller General of the United States conducts an assessment and issues a report to examine the impact of the regulations’ application on the Island’s economy. As per the proposed bill, the report shall take into consideration “regional, metropolitan, and non-metropolitan salary and cost-of-living differences.”

The Comptroller General would have two (2) years from the date of the enactment of the Act to complete the report. Further, the proposed bill requires that the Secretary of Labor, taking into consideration the Comptroller General’s report, certify that the rule will not have an adverse impact on Puerto Rico’s economy. The revised bill appears to have bipartisan support.

We will continue to closely monitor this proposed legislation and provide updates on any further developments.

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